Recent moves indicate investment in real estate enterprises will continue into the future.
Real estate stocks may become an investment channel of interest over the remainder of the year as property continues to emerge as a market of potential, as proven by recent merger and acquisition (M&A) deals, high foreign direct investment (FDI) attraction, and the positive effect of recently-introduced regulations.
The wave of M&A, new legal regulations, and other factors will help Vietnam’s real estate market become more transparent and develop in a sustainable manner while improving the efficiency of real estate developers, according to the Rong Viet Securities JSC. All of these factors will drive interest in real estate stocks over the rest of the year, the company believes.
A Japanese real estate investor has recently announced its acquisition of a 20 per cent stake in An Gia Investment and that it will provide An Gia’s projects with finance and assistance in a deal worth $200 million.
Real estate developer the Nam Long Group (Code: NLG) also announced recently the transfer of 7 million shares to Singapore’s Keppel Land’s subsidiary, Ibeworth Pte. Ltd, who became a major shareholder.
Vingroup JSC (Code: VIC), meanwhile, announced the transfer of its entire stake in the Anh Sao Real Estate Corporation at the end of July. It previously owned 94 per cent of its charter capital, which it purchased from shareholders on April 14.
In the first seven months of the year FDI into real estate stood at $1.69 billion, or 19.3 per cent of all FDI, according to the Foreign Investment Agency (FIA). Real estate ranked second in terms of sectors attracting FDI, behind industry and manufacturing.
In Ho Chi Minh City most FDI went to the real estate sector in the first seven months, with four projects and $1.31 billion, according to a recent report from the Ho Chi Minh City General Statistics Office.
Two long-awaited pieces of legislation came into effect on July 1: the Law on Housing and the Law on Real Estate Business. “Their impact is expected to be significant and will mark an important step towards opening up Vietnam’s real estate market to overseas investment,” said Mr. Richard Leech, Executive Director of CBRE Vietnam.
This will be important not only for the real estate business but also for other sectors, as the government has also agreed to ease restrictions on foreign stakeholders. “There will no longer be foreign ownership limits (FOL), except for the banking sector, which currently has an FOL of 30 per cent,” he said.